Welcome!

News Feed Item

Sappi results for 3rd quarter ended June 2014 highlights continued year-on-year improvement in performance

JOHANNESBURG, July 31, 2014 /PRNewswire/ --

Financial Summary for the quarter

  • Continued year-on-year improvement in quarterly performance
  • Usutu and Nijmegen Mill transactions completed
  • Specialised Cellulose business remains sold out
  • EPS 3 US cents (Q3 2013 loss of 9 US Cents)
  • EBITDA excluding special items US$140 million (Q3 2013 US$88 million)
  • Net debt US$2,286 million (Q3 2013 US$2,331 million)
Sappi Fine Paper North America

Commenting on the result, Sappi Chief Executive Officer Steve Binnie said:
"It is pleasing to note that the group has continued the trend of improving year-on-year performance, with EBITDA excluding special items of US$140 million, operating profit excluding special items of US$67 million and profit for the period of US$17 million.   

"The European business had a solid quarter in a seasonally slow period, with lower variable and fixed costs arising from cost cutting initiatives offsetting weaker graphic paper prices. Demand for coated woodfree paper was stable, but coated mechanical paper continues to be weak.

"The North American business was impacted by a number of planned and unplanned outages at the pulp mills, as well as a continuation of the weak pricing in the coated paper markets.  Price increases for coated woodfree web paper were announced during the quarter and this will bring some relief to a difficult market in the fourth financial quarter.

"The Southern African paper business improved on the prior quarter performance due to lower fixed costs, whilst variable costs were negatively impacted by the weaker Rand.

"The Specialised Cellulose business had a reasonable quarter, impacted by the planned annual maintenance shut at the Cloquet Mill.  As expected, dissolving wood pulp prices experienced increased downward pressure due to weaker viscose staple fibre prices.  Strong shipment volumes contributed towards an EBITDA excluding special items of US$70 million.

"Capital expenditure for the full year is expected to remain below US$300 million and with the proceeds of the Usutu sale and positive cash generation expected in the fourth quarter, we anticipate net debt to end the year close to US$2 billion

"The fourth quarter is a seasonally stronger quarter and we believe that the result for the quarter will continue the trend of improved year-on-year quarterly performance which we have experienced throughout 2014."

 


Quarter ended

Restated1

Jun 2014   Jun 2013  Mar 2014

Nine months ended Restated1

Jun 2014   Jun 2013

Key figures: (US$ million)






Sales

1,484

1,417

1,573

4,556

4,395

Operating profit excluding special items2

67

5

95

222

113

Special items – (gains) losses2

(2)

19

(4)

(16)

(16)

EBITDA excluding special items2

140

88

171

458

373

Profit (Loss) for the period

17

(47)

32

67

(33)

Basic earnings (loss) per share (US cents)

3

(9)

6

13

(6)

Net debt2

2,286

2,331

2,248

2,286

2,331

Key ratios (%)






Operating profit excluding special items to sales

4.5

0.4

6.0

4.9

2.6

Operating profit excluding special items to capital employed (ROCE)

7.8

0.5

11.0

8.7

4.2

EBITDA excluding special items to sales

9.4

6.2

10.9

10.1

8.5

Return on average equity (ROE)2

5.9

(13.5)

11.3

7.8

(3.1)

Net debt to total capitalisation2

66.3

63.5

66.2

66.3

63.5

Net asset value per share (US cents)

222

257

219

222

257







1 Restated for the adoption of IAS 19 (Revised) Employee Benefits and IFRS 10 Consolidated Financial Statements. Refer to the published results for further details.







2 Refer to the published results for details on special items, the definition of the terms and the reconciliation of EBITDA excluding special items to profit/loss for the period.


The table above has not been audited or reviewed.

 

The quarter under review

During this seasonally slow quarter in Europe, overall sales volumes were approximately 2% lower year-on-year, with growth in speciality paper volumes and stable coated woodfree volumes.  The coated mechanical market remains weak, both domestically and globally. Savings in variable, fixed and logistics costs enabled the business to improve the year-on-year performance despite the lower sales prices. An agreement was reached to dispose of the Nijmegen mill to an affiliate of the American Industrial Acquisition Corporation (AIAC).  The mill will now manufacture packaging paper and will no longer be engaged in the coated graphic paper business beyond a 6 month transition arrangement for 52,000 tonnes.

The graphic paper markets in North America continued to be characterised by weak pricing during the quarter, whilst our volumes were flat year-on-year.  Price increases for web products were announced during the quarter and will improve our results going forward. The North American specialities business is experiencing improved sales to Europe, which is offsetting weaker Chinese markets.

The performance of the Southern African business improved compared to the equivalent quarter last year; a quarter impacted by the conversion to dissolving wood pulp at Ngodwana.  The increased dissolving wood pulp sales from Ngodwana, higher average Rand pricing for dissolving wood pulp and improved profitability from the paper packaging business all contributed to the improvement.

Finance costs of US$42 million were slightly below those of the restated equivalent period last year.

Earnings per share for the quarter were 3 US cents (including a gain of 1 US cent in respect of special items), compared to a loss of 9 US cents (including a charge of 3 US cents in respect of special items) in the restated equivalent quarter last year.

Capital expenditure in the quarter declined to US$57 million compared to US$174 million a year ago, reflecting the completion of the expenditure on the dissolving wood pulp projects.

Net debt of US$2,286 million increased by US$38 million compared to the prior quarter, mainly as a result of increased working capital.  Proceeds from the sale of the Usutu assets for ZAR1 billion were received after quarter-end and will be utilised to reduce debt.

Outlook

The stronger than expected coated woodfree paper market, coupled with excellent ongoing cost control and focus, has led to steady progress in the European business, an important cash contributor to the group.  Two important capital projects at Gratkorn and Kirkniemi are underway, allowing us to make further headway in improving the financial performance of this business.

The North American business has experienced an extremely difficult year with cost and price pressures in graphic paper, inclement weather and some operational challenges.  There are early signs that the graphic paper business will see improved returns with good volumes and higher pricing going forward.  Management focus on cost and operations will aid further improvement.

The South African paper packaging business continues to benefit from healthy demand due to a good fruit export season.

Due to the competitive nature of the dissolving wood pulp market and weak viscose staple fibre pricing, we are experiencing continued pressure on our prices.  However, demand remains strong and our mills are essentially sold out for the remainder of the year.

The full results announcement is available at www.sappi.com
There will be a conference call to which investors are invited. Full details are available at www.sappi.com using the links Investor Info; Investor Calendar; 3Q14 Financial Results

Forward-looking statements

Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends, plans or objectives. The words "believe", "anticipate", "expect", "intend", "estimate", "plan", "assume", "positioned", "will", "may", "should", "risk" and other similar expressions, which are predictions of or indicate future events and future trends and which do not relate to historical matters and may be used to identify forward-looking statements. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which are in some cases beyond our control and may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements (and from past results, performance or achievements). Certain factors that may cause such differences include but are not limited to:

  • the highly cyclical nature of the pulp and paper industry (and the factors that contribute to such cyclicality, such as levels of demand, production capacity, production, input costs including raw material, energy and employee costs, and pricing);
  • the impact on our business of the global economic downturn;
  • unanticipated production disruptions (including as a result of planned or unexpected power outages);
  • changes in environmental, tax and other laws and regulations;
  • adverse changes in the markets for our products;
  • the emergence of new technologies and changes in consumer trends including increased preferences for digital media;
  • consequences of our leverage, including as a result of adverse changes in credit markets that affect our ability to raise capital when needed;
  • adverse changes in the political situation and economy in the countries in which we operate or the effect of governmental efforts to address present or future economic or social problems;
  • the impact of restructurings, investments, acquisitions, dispositions and other strategic initiatives (including related financing), any delays, unexpected costs or other problems experienced in connection with dispositions or with integrating acquisitions or implementing restructuring or strategic initiatives (including our announced dissolving wood pulp conversion projects), and achieving expected savings and synergies; and
  • currency fluctuations.

We undertake no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.

Logo - http://photos.prnewswire.com/prnh/20110728/MM43821LOGO

SOURCE Sappi Limited

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
With more than 30 Kubernetes solutions in the marketplace, it's tempting to think Kubernetes and the vendor ecosystem has solved the problem of operationalizing containers at scale or of automatically managing the elasticity of the underlying infrastructure that these solutions need to be truly scalable. Far from it. There are at least six major pain points that companies experience when they try to deploy and run Kubernetes in their complex environments. In this presentation, the speaker will d...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...
When building large, cloud-based applications that operate at a high scale, it's important to maintain a high availability and resilience to failures. In order to do that, you must be tolerant of failures, even in light of failures in other areas of your application. "Fly two mistakes high" is an old adage in the radio control airplane hobby. It means, fly high enough so that if you make a mistake, you can continue flying with room to still make mistakes. In his session at 18th Cloud Expo, Le...
Machine learning has taken residence at our cities' cores and now we can finally have "smart cities." Cities are a collection of buildings made to provide the structure and safety necessary for people to function, create and survive. Buildings are a pool of ever-changing performance data from large automated systems such as heating and cooling to the people that live and work within them. Through machine learning, buildings can optimize performance, reduce costs, and improve occupant comfort by ...
As Cybric's Chief Technology Officer, Mike D. Kail is responsible for the strategic vision and technical direction of the platform. Prior to founding Cybric, Mike was Yahoo's CIO and SVP of Infrastructure, where he led the IT and Data Center functions for the company. He has more than 24 years of IT Operations experience with a focus on highly-scalable architectures.
CI/CD is conceptually straightforward, yet often technically intricate to implement since it requires time and opportunities to develop intimate understanding on not only DevOps processes and operations, but likely product integrations with multiple platforms. This session intends to bridge the gap by offering an intense learning experience while witnessing the processes and operations to build from zero to a simple, yet functional CI/CD pipeline integrated with Jenkins, Github, Docker and Azure...
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Dhiraj Sehgal works in Delphix's product and solution organization. His focus has been DevOps, DataOps, private cloud and datacenters customers, technologies and products. He has wealth of experience in cloud focused and virtualized technologies ranging from compute, networking to storage. He has spoken at Cloud Expo for last 3 years now in New York and Santa Clara.
Enterprises are striving to become digital businesses for differentiated innovation and customer-centricity. Traditionally, they focused on digitizing processes and paper workflow. To be a disruptor and compete against new players, they need to gain insight into business data and innovate at scale. Cloud and cognitive technologies can help them leverage hidden data in SAP/ERP systems to fuel their businesses to accelerate digital transformation success.
Containers and Kubernetes allow for code portability across on-premise VMs, bare metal, or multiple cloud provider environments. Yet, despite this portability promise, developers may include configuration and application definitions that constrain or even eliminate application portability. In this session we'll describe best practices for "configuration as code" in a Kubernetes environment. We will demonstrate how a properly constructed containerized app can be deployed to both Amazon and Azure ...
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.